2020 was a difficult year for us financially. Although our teaching positions provide some regular income, most of our earnings are variable and come from contract work with corporate clients. This revenue stream is predicated on meeting our clients live. As such, travel and lockdown restrictions brought our business to an abrupt standstill in March.
Over the summer the situation improved, but many of our customers were scrambling to adapt to new COVID-19 conditions and had more pressing priorities than investing in the services we offer. Fortunately, however, open contracts were postponed and not cancelled, and with reserves and COVID-19 small business stimulus policies we stayed afloat. We were and remain in a privileged situation for which we are grateful.
The European Union has to date spent approximately $2.8 trillion on combating the economic fallout of COVID-19 pandemic, while the United States has committed $2.6 trillion. These funds have been generated by governments assuming more debt.
Many economists argue that because of current low interest rates borrowing costs are negative and therefore skyrocketing government debt is nothing to worry about. At some point, however, debts need to be paid back, even if it is 100 years in the future as with the Austrian government’s century-bond.
I grew up in the conservative American Midwest and the quaint notion of paying your debts was taught to me by my mother. But she is a geologist and not an economist so maybe she should stick to rocks. Apparently, however, I am not alone in my antiquated prudent thinking. The mainstream media is rife with articles wondering, as Steve Goodman did in his 1983 classic Vegematic, “how are we gonna pay for it all?”
One idea being discussed is taxing the wealthy. In the UK there has been a call for a one-off tax on citizens with private equity over more than £500,000. In New York a movement is underway to increase taxes on the state’s 119 billionaires who have a total net worth of $600.7 billion. And, 83 of the world’s wealthiest people have even petitioned their governments to increase their taxes to pay for COVID-19 relief measures.
What are you thoughts? Is government debt something we should be concerned about? Should taxes be significantly increased on the superrich to fund COVID-19 relief measures? Leave a comment.